How much you can watch your investments drop in value without panicking or selling. Some people can see a 30% drop and stay calm because they know it’ll likely recover. Others lose sleep over a 2% dip. Neither is wrong! Knowing which one you are helps you invest in a way that you can actually stick with. More in How Much Investment Risk Can You Handle?.
Walk through the numbers
If your $20,000 portfolio fell to $14,000 in a bad year, would you keep investing or sell? Your honest answer is a good read on your risk tolerance.
A plan you can stick with in a bad year beats a better plan you abandon. Your mix should match what you can handle.
Related terms
For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.